An obsolete model?

OPEC: Little confidence in demand for oil

The global economy is weakening - and with it the demand for crude oil. Once again, OPEC has to revise its forecast downwards.(Bild: APA/AFP/Pablo VERA)

Oil is increasingly becoming a discontinued model: The Organization of the Petroleum Exporting Countries (OPEC) has reduced its forecasts for oil demand growth this year and in 2025 for the third month in a row.

According to the latest monthly report, the increase in global oil demand this year will be 106,000 barrels (one barrel equals 159 liters) less than previously expected and will average 1.9 million barrels per day. OPEC lowered its forecast for demand growth in 2025 by 102,000 to 1.6 million barrels per day.

Forecast downgraded three times in a row
With the three consecutive downgrades, OPEC is deviating from its previous, comparatively confident forecasts for demand growth. Even after the cuts, its forecasts remain an outlier. Major US banks and the International Energy Agency, for example, expect demand growth to be significantly lower.

This is burdened by the weakening global economy. China's growth has been falling short of expectations for some time now. But the economic recovery in the eurozone is also struggling to get going. A weaker economy also consumes less crude oil.

International prices under pressure
The oil association OPEC+ has announced a gradual withdrawal of production restrictions for December. In view of the weak demand trend, the measure originally planned for October had been postponed. However, some experts doubt that OPEC will actually increase production again.

In addition to the weakening Chinese economy, the high supply from the USA is also weighing on prices. The conflict in the Middle East has recently supported prices somewhat. However, many OPEC countries believe that the current price level is too low.